There’s a saying in the Aerospace Industry: If you haven’t been on a cancelled program yet, just wait.
This axiom likely rings true in many other industries as well. There was a fabled time when corporate jobs appeared to be very stable. You could simply chose the company you wanted to work for and stay with them for 40 years. At least that was the expectation. I’m not sure this was ever really true, but the mirage of corporate stability fully collapsed along with the stock market in 2008. Firms were letting large portions of their workforce go just to stay above water.
The hemorrhaging of employees wasn’t just limited to 2008. While the advertised unemployment rate is currently sitting at 5.5%, the true story of employment resides in the workforce participation rate. The participation rate is hovering around 62.9%, near a 37-year low. A full one-third of able bodied adult Americans did not participate in the labor force. This is an astonishing fact. While some of these people voluntarily stay home, many of them have simply stopped looking for work. After a window of time, about 6-12 months, it becomes very difficult to find a professional job. At this point, a person will take whatever part-time work they can find. As you can see from the plot, this problem has gotten worse since 2008.
My own experiences with this phenomenon first began at the second job I held after college. When the company hired me, times were great there. They were experiencing major growth with a hot new program that had come in. About 18 months after that, the growth came to a screeching halt. That fancy new program abruptly ended with a single announcement. That day, all temporary employees were walked to the door and the layoffs began. Over the next year, the company shrank by more than half. When I finally had enough, I decided to leave and join a new firm. Again, things first seemed great at the new company. They were actively hiring and there was plenty of work to go around. But, after about two years, the new company fell on hard times. Then came six straight years of hiring freezes and annual layoffs. I finally had enough a few months ago, so I moved yet again to a new firm. So far, the new company seems to be doing great. But…
This experience of watching multiple companies decline from the inside has instilled two key lessons into my psyche:
First, I always maintain a strong professional network and keep up on industry skills.
Most of your future job prospects will come from people you know at other companies. It is far more difficult to get hired by randomly applying to a company’s website. If, on the other hand, you have a friend that hands your resume directly to the hiring manager, then you odds of getting the job increase dramatically. Along with having friends at other companies, you also need to keep up on your industry’s skills. This may mean learning a new software package or some other skill in your spare time. You want to make yourself as employable as possible at any given time in case things turn south at your current company.
Second, I strive to maintain a large personal savings rate.
As I was living through years of corporate reductions, I was wracking my brain thinking of ways to improve my position. The best idea I came up with was to increase my personal savings rate. Instead of saving the typical 5-10%, I immediately increased my savings to 25%. I did this by creating a written budget and trimming a few unnecessary expenses. Once you have a much larger cash and investment cushion, you will begin to lose the fear that comes with a potential job loss. If you are able to save more than several years’ worth of expenses, your overall job-related stress level will drop. This will provide you with critical feeling of stability as your company begins to decline (inevitably). Eventually, as your savings continues to grow, you will become financially independent from any job. Financial independence is, after all, the ultimate goal of working.